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Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.

Fears about the stability of the euro continue to affect the trend in financial markets in the week 11-15 July (Milan -3.1%. London –2.5%, Paris -4.8%, Frankfurt -2.5%).

Pirelli bucked the trend of the Milan stock exchange and the Stoxx Auto (+6.6pp; +2.6pp) ending the week at €7.66, a rise of 3.7%. The shares, which have recorded growth of 26.5% since the start of the year, were also sustained by the Goldman Sachs upgrade of its TP to €11.0. High pricing power and continuous improvement of its mix characterise the Pirelli equity story, according to the broker. The market is not ignoring potential growth in Pirelli’s profitability, predicting a group ebit margin of 9.9% in 2011 and 12.7% in 2013.

Prices fell on the major international markets in the week from 23 to 27 May (Milan -1.9%, London -0.2%, Frankfurt -1.4%, Paris -1%), influenced by uncertainties about the Euro stability and the economic trend.

At sector level, more cyclical sectors were most affected, with industrial and technology shares down ( -1.7% and 2.4% respectively), while banking shares recovered (+0.5%).

Pirelli closed at €6.84 (+0.7%) bucking the trend in the sector (+0.8pp vs Stoxx Auto) and against the market (+2.6pp vs FTSE Mib) with average daily trading volumes of around 3.2 billion trades. The share, which has been trading ex-dividend since 23 May, benefited from the Kepler upgrade to €9.0 (from €7.6, Buy confirmed). The broker believes that the upside driver is the sustained demand at sector level, and Pirelli’s strong pricing power and exposure at premium segment. The consensus target price on a coverage of 22 brokers was €8.10 ( €7.6 before the 1Q2011 results) with 91% of commercial banks recommending purchase of the share.

Positive week in the major international Stock Markets (Milan +4%, London +2.9%, Paris +2.6%, Frankfurt +3.7%) which benefit from a better than expected reporting season.

At industry level, it is the Auto that posted the highest increase (+6%), driven by reassuring indications on market trends, especially for Trucks.

Pirelli overperformed the industry, closing at € 7.03, up 7% (+1pp vs. Stoxx Auto). The positive stock trend was supported by encouraging indications on Michelin first quarter sales and by Exane upgrade, stressing Pirelli sound pricing power and bringing the target price from 7 € to 8 €. The latest announcement of a price increase was positively received by the market to offset the higher costs of raw materials.

From June 1, 2011, the Company will increase its prices for Car and SUV Tyres in the U.S. market by 6% to 9%.
Currently, the Target Price Consensus for Pirelli is 7.60 €. Buy is the prevailing recommendation (82%) among the brokers covering Pirelli stock.